A Supply Network’s Optimal Information System and Material Flows

Abstract

The management of a supply network is repeatedly forced to react to changes that have occurred, and to pro-act to changes that may occur. Management would certainly find it useful to have available a model which could identify the optimal re-action, or pro-action, from among all those which are possible. This paper will: (1) describe how such a model can be constructed in practice, and (2) how the model can be solved for the optimal management pro-actions, and reactions. The model describes all supply network interactions at any moment in time, and it describes all time dependent supply network interactions dynamically. The model serves as management’s optimal real-time decision support/information system. It will dynamically calculate the optimal operations policy for the entire supply network. The model is also capable of identifying: the optimal design of a supply network, the optimal capacities of a network, and the optimal network facility locations. It also solves some well known problems such as what is the optimal pure “demand – pull” policy in a network?